(For more stories on Japan's Aug 30 election click [ID:nPOLJP]) (See also TAKE A LOOK [ID:nOKADAJP]
TOKYO, Aug 10 (Reuters) - It is not desirable for Japan to intervene in currency markets when currency rates are in line with economic fundamentals, Katsuya Okada, the No.2 in Japan's main opposition Democratic Party, said on Monday. [ID:nT4896]
Polls show the Democrats have their best ever chance of ousting the long-ruling Liberal Democratic Party (LDP) in an Aug. 30 election, ending more than five decades of almost unbroken rule by the LDP and raising the chances of breaking a stalemate in a divided parliament.
Below are key quotes from Okada at a Thomson Reuters Newsmaker event:
ON FOREIGN EXCHANGE
"What to do with currencies should be left to a new government. But I think trying to move currency rates artificially when they are in line with economic fundamentals would be undesirable in the long run."
ON THE ECONOMY
"If we do not change the model of relying on exports, there will be no future for Japan's economy.
"I think it is too optimistic a view to say that the economy is recovering. Last year, the economy was just far too bad ... and we have just come back somewhat.
"I don't think we can yet say we are at a sustained growth basis.
"Growth that relies on exports to the United States, in particular, clearly has its limits as the U.S. overconsumption is being corrected.
"For domestic demand-led growth, consumption has to be at the centre."
Asked if the Democrats might consider additional economic stimulus measures if the economy suffered a double-dip:
"I will not rule out fresh economic measures. Depending on the situation, I think there could be a need for that.
"I think one possible option may be to bring forward various policies we are thinking of conducting starting next fiscal year.
"Regarding sources of financing, there is a lot within the recent extra budget of 14 trillion yen ($143.8 billion) that has not started. There is also a lot that seems, to our eyes, to be wasteful. One possible idea is to freeze such things and to use those funds in the future."
ON FISCAL TARGETS
"I do think that if the economy stabilises to a certain level, then we want to set a new target by the time we form a budget for the next fiscal year, but there are many uncertain factors as to whether the economy will recover to such a stable situation by this December."
ON CORPORATE TAX
Asked if the Democrats were considering tax cuts for large firms rather than just for small and medium-sized companies:
"In the previous election, Keidanren (Japan's biggest business lobby) stood at the forefront and supported the LDP, and they made a very harsh assessment of our policy. That is because of differing perspectives, and I do not think that can be helped.
"We do not particularly want Keidanren to support us. We will firmly stress our policies to the voters.
"Of course, if there are particular companies that want to support us, we would like to welcome that. But we will not bend our policies for that purpose.
"We are not thinking of reducing any corporate taxes other than for SMEs."
"Going forward, Asia is expected to become more prosperous. The domestic demand of Asia as a region is extremely important. As Asia grows, Japan can be a part of that."
ON U.S.-JAPAN RELATIONS
"What is important is for President Obama and Prime Minister Hatoyama, if there is a government change, to first build a relationship with firm trust. There are various issues of concern between Japan and United States. It is necessary to coordinate what issues are the priorities that need to be solved and to work on changing systems based on the trust.
"During the Bush Administration, when things were very negative about nuclear disarmament, the LDP had said that was fine. Then when the Obama Administration came to power ... it said the Obama Administration's nuclear policies are great, 'Let's work together'. No one will trust them if they are like that. That's what I mean by Japan lacks independence.
"Unless Japan has its own nuclear strategy, nuclear disarmament, and nuclear non-proliferation policies and it strikes a balance with the United States, and if Japan thinks there is no mistake if it just follows what the United States says, then I think as a sovereign nation that is very pathetic."
"What's important is that it (China) improves transparency.
"Our economic interdependency is growing, so there is no option for us to be in a military conflict. If that is so then we should not be in an arms race, but rather aiming to reduce arms in the future."
"It is not a choice of one or the other (food self-sufficiency or pursuing free trade).
"Other developed countries such as the EU (European Union) have achieved a self-sufficiency rate of 60-70 percent, but that doesn't mean they don't have free trade."
ON THE CLIMATE
"It's negative to think that climate change (policies) will hinder economic growth. Rather, this is an opportunity, like a green New Deal. The companies that see buds of new growth in this and take up the challenge will be the ones that will grow going forward."
ON OPPORTUNITIES FOR WOMEN
"In the current Japan company system, highly competent women don't find many opportunities, so they go outside of Japan, or go to foreign firms ... What we need to do is to open the doors and let in new winds."
ON NORTH KOREA
"We are at a critical moment to see whether North Korea will have nuclear weapons and we should prevent that from becoming a fact. For that purpose, we should not hesitate to apply pressure. But the purpose of applying pressure is to bring them back to the negotiating table to solve the nuclear, missile and abductee issues.
"We are not hoping to change the current regime by applying pressure. What we are hoping for is to apply pressure so that the DPRK (Democratic People's Republic of Korea) will come to the table for dialogue."
ON KEEPING PUBLIC SUPPORT UNTIL UPPER HOUSE ELECTION
"We have an upper house election next summer and the public won't support us unless they can feel things have actually changed. We will make sure to implement measures promised in our manifesto and in addition, we will seek a new relationship between politics and the bureaucracy. Those things will be important for our first 300 days until the upper house election." (Reporting by David Dolan, Masayuki Kitano, Yoko Kubota and Yoko Nishikawa; Editing by Joseph Radford and Michael Watson)